Legislature(1993 - 1994)
03/15/1994 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 497 - OFFICERS OF UTILTIY COOPERATIVES Number 020 REPRESENTATIVE JOE GREEN, SPONSOR OF SSHB 497, testified saying, "This is actually a very simple bill. It just addresses a problem of one of the cooperatives in the state. It happens to be the one that serves my district. The problem is: As restricted by current statute, the presiding officer of a utility board of directors must assume the title president. Usually the president assumes the responsibility of day-to-day operations while a chairman or a chairwomen presides over the board." (Representatives Davies, Bunde and Williams joined the committee at 1:04 p.m.) REPRESENTATIVE GREEN continued, "I have sponsored this bill at the request of the electrical cooperative that serves my district. At that utility, the day-to-day manager is called the general manager. The problem is there that the banks and other institutions with whom this person must deal pay little attention or respect to someone with the title of general manager. A simple solution to this, especially in regards to dealing with banks and refinancing institutions is that the bill would allow, but not require, utilities to call the presiding officer a chairman, which is the common title for such a position in today's business world. This would allow the day-to-day manager to be called a president. When the president of the utility calls for an appointment, it is my belief that he or she will be better received than a general manager. This then would serve the utility well and the 65,000 cooperative members would benefit." Number 063 REPRESENTATIVE CYNTHIA TOOHEY asked, "What is the cost of putting this bill in?" REPRESENTATIVE GREEN said, "In actual dollars, very little..." REPRESENTATIVE TOOHEY asked, "Is it really that important to do this?" REPRESENTATIVE GREEN replied, "It is in this particular cooperative's case because, as I mentioned, as a general manager he sometimes has difficulty getting appointments that he wouldn't have difficulty getting if he were called president." Number 075 DAVID HUTCHENS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC COOPERATIVES ASSOCIATION, testified in support of SSHB 497 saying, "We probably never would have raised the issue, except for the fact that the financing resources available to electric and telephone cooperatives is rapidly changing. Chugach Electric, the largest co-op of the state, no longer borrows from REA (Rural Electrification Administration) and so they have to go out into the regular commercial banking market to get their financing. And when they go to Wall Street for a bond issue, as they have done once and anticipate doing again before too long, they found that... it was a handicap for them that they were using, as required by state statute, titles that are inconsistent with normal business practices, by others coming before the Wall Street folks for bond issues. So this would simply make it permissive with the electric co-ops and telephone co-ops to change their bylaws if they choose to do so to use the titles chairman and vice-chairman for their board officers to free up the title president for the person who is now known as their general manager. It's a very small item but would be of significance to the cooperative utilities as they lose their REA financing. Right now, the only one I think this appeals to is Chugach Electric Association, perhaps Matanuska Telephone Association. There will be others as time goes along." Number 130 REPRESENTATIVE TOOHEY asked, "What prevents your Board of Directors from naming you president?" MR. HUTCHENS said, "The state law says that the president has to be the chief presiding officer of the board." CHAIRMAN OLBERG said, "Most commonly, chairman of the board and president are two distinct terms. And president is typically chief operating officer." REPRESENTATIVE GREEN said, "The board takes a very active part. It's not as if it were the board of General Motors or the board of most corporations. The board meets weekly and takes up a significant number of matters that wouldn't be common to other types of organizations and because of that, these two people are in a lot of activities that maybe wouldn't otherwise be the case, so this would certainly ease that concern." Number 160 DAN BLOOMER, EXECUTIVE STAFF ASSISTANT, CHUGACH ELECTRIC ASSOCIATION, testified via teleconference in support of SSHB 497 saying, "Chugach strongly supports the passage of this bill which will allow the electric and telephone cooperatives to use the title of chairman and vice-chairman for the top board officers. ...current statute requires that the titles of president and vice president be used for these officers. In the previous years, Chugach and the other electric cooperatives throughout the state and around the nation have relied solely on the Rural Electrification Administration, the REA, to provide capital for the construction for the construction of plant and other facilities. In recent years, the REA has decreased the amount of loan funds available to cooperatives, increased the interest rates for its loans and has forced many of the cooperatives to take alternative financing. "In 1991, Chugach took advantage of federal legislation which allowed it to prepay its REA debt prior to the maturity of the loan without penalty. Chugach refinanced its REA debt through a public bond offering and became the first electric cooperative in the nation to sell bonds in the public market to replace REA debt. During the bond sale preparation, Chugach's organizational structure was reviewed and scrutinized by a number of financiers and bond rating agencies. Those organizations were confused with the board officers titles of president and vice president, which are different from what they experience in their dealings with privately owned corporations. The proposed HB 497 offers electric and telephone cooperatives the option of changing these titles if they so desire but does not require them to do so." CHAIRMAN OLBERG said, "Representative Toohey, I think your point is well-taken and if it weren't already in statute I think one could wonder why it's in statute, but since it is and it acts as an impediment to an organization that has guts enough to go out on the bond market and get away from REA, I think it's a valid piece of legislation." REPRESENTATIVE DAVIES said, "I would offer a conceptual amendment which would just add the word `chairwomen' and `vice-chairwomen' everywhere that it would be appropriate, in front of chairmen and vice-chairmen." CHAIRMAN OLBERG objected to the amendment and said, "I simply think that chairmen and vice-chairmen are generic terms in everyday business." REPRESENTATIVE TOOHEY objected to Chairman Olberg's comment. REPRESENTATIVE DAVIES said, "I think that's the problem that we, in our language, tend to do that and I think that we need to make every effort to recognize that we don't erect glass ceilings and things like that. By our language, sometimes we imply that somehow if you're a man, you're better than if you're a woman. And I think that this would recognize explicitly that we don't do that. We call our speaker `madame speaker' to reflect that. We don't call her Mr. Speaker or something like that or some term that implies a certain gender. So I think that either we have a gender neutral term or we reflect the appropriate gender. Again it's an option, they can do whatever they want. It's no mandate. It's just an option." Number 260 CHAIRMAN OLBERG said, "The question before us is then: shall the words chairwoman and vice-chairwoman be added in all the appropriate places?" A role call vote was taken. Representatives Willis, Toohey, Davies and Bunde voted to adopt the amendment. Representatives Williams, Sanders and Olberg voted no. The motion to amend SSHB 497 passed. REPRESENTATIVE WILLIAMS moved that the amended version of SSHB 497 be moved out of committee. There were no objections.